Spain Households’ Savings Target Investment Funds

J.L.M. Campuzano | (Spanish Banking Association) Spanish households reduced their savings efforts marginally in the third quarter of 2017. Despite the Spanish banks’ attempts to offer positive returns on deposits against a backdrop of negative interest rates from the ECB, families are looking for greater returns from other kinds of financial assets like investment funds.

Households’ total financial assets rose 2.8% up until the third quarter of last year. Of these financial savings 40% remains in deposits and cash. It’s a considerable figure which reflects the confidence and security which the lenders are offering. Holdings of capital would be 25% of the total, followed by 17% in insurance and pension funds and 14% in investment funds. The holdings in investment funds increased their weighting the most in households’ total financial assets up until the third quarter. According to figures from Inverco, now including data up to November, the annual increase in assets was 10% and 13% over the last 12 months.

The financial accounts of the Spanish Economy which the Bank of Spain published earlier this week have also shown that, with accumulated data for four quarters, net financial operations of resident sectors showed a surplus of 24 billion euros, equivalent to 2% of GDP, compared with 2.1% for the whole of 2016. This improvement in the financial figures are explained by the fact that families had a financial surplus of 0.8% of GDP, companies a positive balance of 2% and, in particular, the financial sector had a surplus of 2.3%. The public sector registered a deficit over the period of 3.1% of GDP.

The deleveraging process continued up until the third quarter in the case of households and companies. Gross debt of both sectors was 159.9% of GDP, 8.5 points below the levels of a year ago. Breaking this down, corporate debt accounted for 98.1% of GDP and households debt for 61.8%. Households’ net wealth increased 4.3% at the end of the third quarter 2017.